In my first couple Financial Freedom updates, I talked about what life has been like since becoming a millionaire, why I like passive income, and our family financial goals going forward.

Here is a summary:

Financial Goals

Our current annual recurring expenses are in the $50-$52k range, but that’s without vacation costs. However, while travel is important to us, it is something that we consider discretionary (and frankly, a luxury). If money became tight, we could cut vacation for the year. In light of this, our ultimate goal for passive income to be have enough to cover recurring expenses, and for business (or other active) income to cover luxuries such as travel, savings for a new car, and simply extra cash flow.

Major Financial Goal: To generate $60,000/year in passive income by end of year 2020 (age 41).

Reaching this goal would mean that my family could live comfortably without relying on full time salaries. I would have the choice to leave full time work and allow me to focus my efforts on other interests, hobbies, and other capitalistic pursuits.

Current Financial Numbers

So now that I’ve declared my financial goal, where do I stand now? Here are the annual dividends generated by account:

Since December, we haven’t had a lot of changes to our financial situation – it’s been slow and steady. We are still living off my government salary, so we are particularly paying attention to our spending. Perhaps that’s an idea for a future post, and update on our spending during 2015. Mrs. FT has since volunteered and substituted in a private pre-school and seems to be enjoying it thus far. In fact, she’s enjoying it much more than her health profession. So you never know, when her leave comes due at the end of the summer, a career change may be in the works.

As dividends are the main focus of my passive income pursuit, there is a large dependence on the market. While there are merits to this investment strategy, there are also substantial risks – particularly dividend cuts. The goal of the strategy is to pick strong companies with a long track record of dividend increases. However, even with the best of intentions, with the current extended oil correction, my energy positions have continued to experience dividend cuts. With prolonged low oil prices, energy based dividend stocks have taken a hit. With significant exposure to the energy market, it hasn’t been pretty.

To start, my leveraged Smith Manoeuvre dividend portfolio has again seen a significant drop in dividend income quarter over quarter ($5,475 annually -> $5,224 annually). This is due to dividend cuts in a number of resource names . While these are companies of decent quality, prior to their dividend cuts, they did not have a history of dividend increases.

On the bright side, even with the decreased dividend income in some of our accounts, it hasn’t been all bad. The good news is that I’ve continued to deploy some of that corporate cash into dividend stocks which has resulted in an overall gain in dividend income quarter over quarter ($3,669 annually -> $4,800 annually) . With oil in the low 40’s and other resource/materials companies hurting, I am watching the best names and waiting to deploy more capital. If you are also interested in the dividend growth strategy, here are the Canadian dividend stocks with the longest history of dividend increases. With this list, you’ll get a general idea of the names that I’ve been adding to my corporate account.

We still have a long way to go, but we are, for the most part, moving in the right direction. I hope to cross the $20,000 annual dividend income this year. I have a substantial amount of cash to deploy in both my “non-registered” account and in my corporate portfolio. You may notice that RRSP 2 is also fairly minimal in dividends, that’s because that is my wife’s RRSP, and it is 100% indexed.

About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

To make this a better apples to apples comparison, it would be an asset to know how much you have invested to make the amount of dividends above. At this point the readers have no idea if you are making 1% annually or 25%.

I totally agree with Billy’s comment above, it would be very helpful to know how much capital is invested into those accounts and when you add new positions or capital to better understand how much capital is required to generate that annual dividend.

perhaps showing the book value, the market value and the dividends per year?

Keep up the good work.
Would also be nice to see the net worth over time graph.
I know it’s not your primary goal, but it’s important.
Most importantly is investments over time. Should be captured in a graph.
If you’re fixed on having your income from dividends then, of course, dividends/year.